Business Tips

Funding Options for Your Start-Up Business

Unless you’re the main programmer and you’ve decided to invest your time and effort into getting a web-based start-up off the ground, chances are you’ll need some form of funding to turn your idea into profitable business. If you do indeed plan to have your start-up operating as real business, even if you may personally have the skills and raw materials needed to produce the product or service you’ll be selling (if you don’t merely want to “own” your job as a self-employed individual) you’ll have to find a way to eventually remove yourself from the primary production process.

As the owner, you have to work on the business as opposed to working in the business and you’ll find your time is likely spent on things like data analysis, monitoring and checking that work is being done on time, etc. But if you’re looking for funding beyond digging into your own pocket (most people don’t have that kind of money just lying around anyway), there are a few funding options available to you.

Self-Funding

If you can raise enough money through your regular work, selling off an asset or via another business you perhaps already have going on, self-funding is the best way of funding your start-up or venture.

Not all of us have some trust fund we inherited waiting for us in a bank vault somewhere, so if you have the right support structure around you, there’s nothing wrong with self-funding your start-up by living on a student budget for about three to four months and then directing most of your earnings (from a job or two) towards constructing a stockpile of cash to get your start-up off the ground with. Knowing you have a limited supply of cash will create some urgency in getting things going so that you can start making a profit.

Bank Loan

As much as bank loans are somewhat of a last resort for most entrepreneurs, the biggest reason behind that is the fact that they’re hard to get. Banks loan out money for start-up businesses according to strict criteria, and if you manage to secure a bank loan it simply means the bank (which is right in the middle of the business sector) truly believes they’re going to get their money back.

If you have an unconventional idea though and the bank refuses to lend you money, it doesn’t mean you should shelve it and it doesn’t mean it won’t work. Just take heart from the fact that banks really don’t take risks, and so it really doesn’t mean you will fail.

Crowd-Funding and Grants

Believe it or not, but there are individuals and businesses who want to fund your business idea or start-up without receiving anything in return, other than some acknowledgement perhaps.

Crowd-funders in particular usually donate generously to fund start-ups, but this is because each individual only contributes a little bit to make up some sizeable overall capital, while big businesses and companies find funding start-ups a much more viable option for their tax structures and perhaps as part of their corporate social responsibility programmes.

Either way, it’s a great way to get some good funding for your start-up, even though in some instances you’ll inevitably have to pay your contributors back in some or other way.